are the basic functions of accounting bookkeeping and financial reporting managers and investors. However, the accounting department of the business is usually responsible for payroll, cash receipts, expenditures, purchasing and inventory, and asset accounting. If these functions are done in a timely and efficient operations will survive.
Many of these functions, and many accounting, focus on the business. These are the economic exchanges between the business and individuals or other businesses that work. Accounting requires an understanding of how these transactions are accounted for. Most companies carry on economic exchanges with the six basic groups:
1) Customers who buy products and services,
2) Employees who are paid wages and benefits are given to work with business,
3) suppliers and distributors, who sell the business,
4) sources of debt capital, which loan money to businesses,
5) the sources of equity capital, investing in the Company expects earnings from invested capital, and
6) The Government, which collects various taxes.
There are other events that have economic impact on the work that must be recorded, such as claims, uninsured flood or other loss, severance pay for laid-off workers, and other non-planned events and circumstances.
is the first basic function of accounting is also to monitor and record all of the above economic exchange, while the second is to report. Accountants prepare financial statements for managers and company reports investitorima.Tri most basic financial statements are the statements of financial position or balance sheet, income statement and cash flow statement. Everyone in business should understand and know how to read these three statements.
balance
balance sheet and statement of financial condition, summarizes the assets owned by the business on one side and the source of property to another. Sources of funds are divided into two basic categories: liabilities and owners equity. Some assets come from borrowing money or buying on credit has not been paid yet. These are obligations. The remaining funds come from the owners of capital, which consists of money invested in the business of the owner and operating profit is earned and maintained. It is important to remember that the balance sheet as a snapshot and just shows how much the job is worth on the balance sheet is drawn up.
usually see the balance sheet as follows:
Primary Balance
List of assets List of liabilities
owners of capital
Total Assets = Total Liabilities + Owner's equity
Sometimes you will also see the owners of capital is called net worth. It is calculated as assets - liabilities = net worth. While this May means that the business is worth the amount recorded in the owner's equity accounts, it does not necessarily mean the business could be sold for that amount. Much more needs to be solved to determine the selling price of the business. However, it is important to balance a report that shows how much you have and how much you owe at a particular point in time.
Income Statement
profit and loss account or income statement, revenue and expenditure measures. It sums up the profits of business activities over time. One part of the report lists all income: earned, passive or portfolio. The second part of the report lists all costs. It's often like this:
The basic profit and loss
profit
- Costs
= Net profit
Preparation of profit and loss account on a regular basis to help in measuring the financial progress. Most managers and investors pay more attention to profit and loss account, and you'll often see a shortened version of the financial pages of reporting top line sales and bottom line net profit.
Statement of Cash Flows
Cash flow refers to cash flow comes as income goes as troškovi.Izvješća cash flow statement shows the sources and uses of cash in operations during the financial razdoblja.Uspješno business must manage and profit and cash flow, not just each other. Cash flow statements often look like this:
The basic cash flow statement
Part 1 Business activities. Cash flow from profits of the business transactions
Part 2 Investment activities. Cash inflows and outflows from investing activities.
Part 3 Financing activities. Cash inflows and outflows from financing activities.
by adding three types of cash flows from the air determines the bottom-line net increase or decrease in cash during the period. Net cash flow from part one, the business activity does not always correspond to profit as reported in the income statement. This is because the actual cash flow and cost of sales are in different time table that, when sales revenues and expenses recorded in the books. Profit performance of the business gets the most attention, but it is also important to understand and know the cash flow from profit and which is located in this important statement.
do not need an MBA, and should not be a CPA to start a business. However, an understanding of basic accounting will help you with the financial aspects of your business, investment, tax, and financial management. You will be at the expense unless you understand the basics of accounting. If the accounting function and the three basic accounting reports covered in this chapter are new to you, it is imperative you seek funds to learn more about this subject. If you already have a basic understanding of accounting principles and statements, make sure you are keeping on top of them in your business and personal life.
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